Management Information System

CHAPTER ONE
INTRODUCTION TO MIS

1.1 Definition and Importance of MIS

MIS is combination of three words i.e. Management, Information and
System. To better understand the concept MIS, we will try to understand
these three words.

MANAGEMENT
Various scholars have described ‘Management’ in various ways, but
Koontz’s definition would be considered: “Management is the art of getting
things done through and with the efforts of other people.” However, a
manager gets things done by performing basic managerial functions. These
functions are: Planning, organizing, staffing, directing and controlling which
can be seen in Fayol definition of management. Henry Fayol defines what a
manager does, but it is probably more appropriate to define what
management is in this concept (which is clearly seen in Koontz’s definition)
rather than what management does.
Management is the process of allocating an organization's inputs, including
human and economic resources, by planning, organizing, directing, and
controlling for the purpose of producing goods or services desired by
customers so that organizational objectives are accomplished. If
management has knowledge of the planning, organizing, directing, and
controlling of the business, its decisions can be made on the basis of facts,
and decisions are more accurate and timely as a result.

INFORMATION
It is the second component of ‘MIS’. Information is today seen, indeed
accepted and recognized, as an invaluable source to ensure effective and
efficient decision making thereby ensuring optimality of results leading to
survival, success and prosperity of the Business Organization.
Information is a Resource because:

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 It is scarce
 It has a cost
 It has alternative uses
 There is an opportunity cost factor involved if one does not process
information
It must, however, be remembered that unlike other resources which can be
used only once, information could be used again and again. It is not also
tangible. A decision maker must keep these aspects in mind. Many a times,
we really do not have the information we want and then there is a dilemma.
The dilemma is beautifully expressed in the following words, generally
referred to as Fingale's Law of Information:
"The information we have,
ls not what we want,
The information we want
ls not the information we need,
The information we need,
Is not available.”
Information is a data which is processed and presented to decision makers
and helps them in making decisions. Information, in MIS, means the
processed data that helps the management in planning, controlling and
operations. Data means all the facts arising out of the operations of the
concern. Data is processed i.e. recorded, summarized, compared and finally
presented to the management in the form of MIS report.
A brief example contrasting information and data may prove useful.
Supermarket checkout counters scan millions of pieces of data from
bar codes, which describe each product. Such pieces of data can be
totaled and analyzed to provide meaningful information, such as the
total number of bottles of dish detergent sold at a particular store,
which brands of dish detergent were selling the most rapidly at that
store or sales territory, or the total amount spent on that brand of
dish detergent at that store or sales region.

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SYSTEM
The word ‘System’ is a set of elements that are inter-related and
interdependent to achieve a common goal. Data is processed into
information with the help of a system. A system is made up of inputs,
processing, output and feedback or control. A system is an integrated set of
components, or entities, that interact to achieve a particular function or
goal. Systems have characteristics such as
 boundaries,
 outputs and inputs,
 methods of converting inputs into outputs, and
 System interfaces.
Systems are composed of interrelated and interdependent subsystems.
Examples of systems are all around us-in fact; an excellent example is your
class. The components of the classroom situation, including an instructor,
the students, textbooks, and facilities, all interact to make the
accomplishment of learning goals possible.

A business is also a system. A business uses resources such as people,

capital, materials, and facilities to achieve the goal of making a profit.
Business procedures, such as order handling, marketing research, financial
planning, and manufacturing, are the interactions that need to be managed
to achieve this objective.

MANAGEMENT INFORMATION SYSTEM (MIS)

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After discussing the three components of MIS, now we shall try to

understand its definition. While discussing the components: Management,
Information and System, it has been cleared that decision making is an
important part of managerial functions. For taking adequate decisions,
Management Information (MI) is necessary as it works as a vital input.
A system which consists of people, machines, procedures, databases and
data models as its components is known as Management Information
System. This system collects data from external and internal sources of an
organization, analyzes it and supplies management information to managers
and helps them in making decisions.
Simply put, MIS is the system, which makes available the right information
to the right person, at the right place, at the right time, in the right form
and at the right cost.
According to G.B. Davis, “MIS is a man or machine that provides
information to support management in decision making process.”
 Management Information System or 'MIS' is a planned system of
collecting, storing, and disseminating data in the form of information
needed to carry out the functions of management.
 It is the study of information systems focusing on their use in business
and management.
 MIS is defined as a system which provides information support for
decision making in the organization.
 MIS is defined as an integrated system of man and machine for
providing the information to support the operations, the management
and the decision making function in the organization.
 MIS is defined as a system based on the database of the organization
evolved for the purpose of providing information to the people in the
organization.
 MIS is defined as a Computer – based Information System.
 MIS involve three primary resources: technology, information, and
people.

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 MIS provides managers with information and support for effective

decision making, and provides feedback on daily operations
 Output, or reports, are usually generated through accumulation of
transaction processing data
 Each MIS is an integrated collection of subsystems, which are
typically organized along functional lines within an organization

Outputs of a Management Information System

 Scheduled reports
• Produced periodically, or on a schedule (daily, weekly,
monthly)
 Key-indicator report
• Summarizes the previous day’s critical activities
• Typically available at the beginning of each day
 Demand report
• Gives certain information at a manager’s request
 Exception report
• Automatically produced when a situation is unusual or
requires management action

Key Indicator Report Example

Daily Sales Key Indicator Report

This Last Last

Mont Month Year
h

Total Orders Month to $1,8 $1,694 $1,014

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Date 08

Forecasted Sales for the $2,4 $2,224 $2,608

Month 06

Scheduled Report Example

Daily Sales Detail Report

Prepared: 11/11/2016

Order Custome Sales Ship Amount

# r Rep ID Date Quantity Item
ID #

P1245 C89321 CAR 10/11/16 144 P1234 $3,214

3

P1245 C89321 CAR 09/11/16 288 P3214 $5,660

3

P1245 C03214 GWA 08/11/16 12 P4902 $1,224

3

P1245 C52313 SAK 05/11/16 24 P4012 $2,448

5

P1245 C34123 JMW 04/11/16 144 P3214 $720

6

Demand Report Example

Daily Sales by Sales Rep

Summary Report
Prepared: 11/11/16

Sales Rep ID Amount

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CAR $42,345

GWA $38,950

Exception Report Example

Daily Sales Exception Report – ORDERS OVER $10,000

Prepared: 11/11/16

Orde Custo Sales Rep Ship

r mer ID Date Quant Item Amou
# ID ity # nt

P124 C8932 CAR 08/12/ 144 P123 $13,2

53 1 96 4 14

P124 C8932 CAR 08/12/ 288 P321 $15,6

53 1 96 4 60

P124 C0321 GWA 08/13/ 12 P490 $11,2

53 4 96 2 24

Outputs of a Management Information System

Earnings by Quarter (Millions)

Actual Forecast Variance

2ND Qtr 2016 $12.6 $11.8 6.8%

1st Qtr 2016 $10.8 $10.7 0.9%

4th Qtr 2015 $14.3 $14.5 -1.4%

3rd Qtr 2015 $12.8 $13.3 -3.0%

Roles Of MIS

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 The role of MIS in an organization can be compared to the role of heart in

the body.
 The information is the blood and MIS is the heart. In the body the heart
plays the role of supplying pure blood to all the elements of the body
including the brain.
 The MIS plays exactly the same role in the organization.
 The system ensures that an appropriate data is collected from the various
sources, processed, and sent further to all the needy destinations.
 The system is expected to fulfill the information needs of an individual, a
group of individuals, the management functionaries: the managers and the
top management.
 The MIS satisfies the diverse needs through a variety of systems such as
Query Systems, Analysis Systems, Modeling Systems and Decision Support
Systems.
 The MIS helps in Strategic Planning, Management Control, Operational
Control and Transaction Processing.

Objectives of MIS
The goals of an MIS are to implement the organizational structure and
dynamics of the enterprise for the purpose of managing the organization in
a better way and capturing the potential of the information system for
competitive advantage.
Following are the basic objectives of an MIS:
 Capturing Data: Capturing contextual data, or operational
information that will contribute in decision making from various
internal and external sources of organization.
 Processing Data: The captured data is processed into information
needed for planning, organizing, coordinating, directing and
controlling functionalities at strategic, tactical and operational level.
Processing data means:
o making calculations with the data

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o sorting data
o classifying data and
o summarizing data
 Information Storage: Information or processed data need to be
stored for future use.
 Information Retrieval: The system should be able to retrieve this
information from the storage as and when required by various users.
 Information Propagation: Information or the finished product of
the MIS should be circulated to its users periodically using the
organizational network.

Characteristics of a Management Information System

 Provides reports with fixed and standard formats
 Hard-copy and soft-copy reports
 Uses internal data stored in the computer system
 End users can develop custom reports
 Requires formal requests from users

1.2 SUBSYSTEMS OF AN MIS

Two approaches of defining the subsystems of an MIS are:
1. According to the organizational functions which they support and
2. According to managerial activities for which they are used.
1. Activities Sub-systems

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2. Organizational function sub-systems:

1.3 The Contemporary Approaches to MIS

The Contemporary Approaches to Information Systems Development could
be broadly categorized into:
a) The Technical Approach

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b) The Behavioral Approach

c) The Socio-Technical Approach
i. The Technical Approach
This approach is centered on mathematical and normative models to study
information systems. It also relies heavily on the physical technology and
the formal capabilities of these systems. As such, Computer Science,
Management Science and Operations Research disciplines contribute
significantly to the Technical Approach.

ii. The Behavioral Approach

While Information Technology may heavily depend upon the technical
aspects/ disciplines, the developer has to consider the behavioral
impact/response of people in the organizations where Information Systems
would be implemented. Indeed, Motivational Feasibility is now considered
to be of critical importance while developing Information Systems.
As an Information System has to address and take cognizance of behavioral
problems and issues (system utilization and system implementation to
mention a few), it is imperative that behavioral factors are taken into
consideration.
The Behavioral Approach, therefore, borrows heavily from the principles of
Political Science, Psychology, Sociology and Organizational Behavior,
among others. This approach, according to Kling and Dutton, focuses not
on technical solutions but on the changes in attitudes, management and
organizational policy.
Figure 1.1 Contemporary Approaches to MIS

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iii. The Socio-Technical Approach

It is now realized that the problems faced while developing and
implementing Information Systems are neither purely technical nor
behavioral. It, therefore, becomes important to understand the perspectives
of both technical as well as behavioral disciplines. Perspectives from other
disciplines would also be immensely helpful/ useful.
The Socio-Technical Approach does not opt for purely
technical/technological or behavioral approach, but it does attempt to
borrow heavily from both the approaches and synthesize so as to optimize
the performance of the Information System as a whole. This approach is
now being increasingly accepted and implemented.
In this view, optimal organizational performance is achieved by jointly
optimizing both the social and technical systems used in production.
Adopting a socio-technical systems perspective helps to avoid a purely
technological approach to information systems.

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For instance, the fact that information technology is rapidly declining in

cost and growing in power does not necessarily or easily translate into
productivity enhancement or bottom-line profits.
The fact that a firm has recently installed an enterprise-wide financial
reporting system does not necessarily mean that it will be used, or used
effectively. Likewise, the fact that a firm has recently introduced new
business procedures and processes does not necessarily mean employees
will be more productive in the absence of investments in new information
systems to enable those processes. The instructor of this course, stress the
need to optimize the firm’s performance as a whole. Both the technical and
behavioral components need attention. This means that technology must be
changed and designed in such a way as to fit organizational and individual
needs. Sometimes, the technology may have to be “de-optimized” to
accomplish this fit. For instance, mobile phone users adapt this technology
to their personal needs, and as a result manufacturers quickly seek to
adjust the technology to conform to user expectations.
Organizations and individuals must also be changed through training,
learning, and planned organizational change to allow the technology to
operate and prosper. Figure 1.2 illustrates this process of mutual
adjustment in a socio-technical system.

Figure 1.2 a Socio-Technical Perspective of MIS

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1.4 The Evolution and characteristics of the Information Age

1. Agricultural Age: The period up to the 1800s, when the majority of
workers were farmers whose lives revolved around agriculture.
2. Industrial Age: The period from the 1800s to 1957, when work
processes were simplified through mechanization and automation.
3. Information Age: The period that began in 1957, in which the
majority of workers are involved in the creation, distribution, and
application of information.
 Knowledge Workers: Workers involved in the creation,
distribution, and application of information.
Table 1.1 the Evolution of the Information Age

The Characteristics of the Information Age

 An information-based society has arisen.

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 Information Society: A society in which more people

work at handling information than at agriculture and
manufacturing combined.
 Businesses depend on information technology to get their work
done.
 Work processes are being transformed to increase productivity.
 Work Processes: The combination of activities that
workers perform, the way they perform those activities,
and the tools they use.
 Productivity: The relationship between the results of an
activity (output) and the resources used to create those
results (inputs).
 Effectiveness: The extent to which desirable results are
achieved.
 Information technology provides the means to
rethink/recreate/reengineer conventional business processes.
 Reengineering: The reshaping of business processes to
remove barriers that prohibit an organization from
providing better products and services and to help the
organization capitalize on its strengths.
 Business Processes: Collections of activities, often
spanning several departments that take one or more kinds
of input and create a result that is of value to a company’s
customers.
 Success in business is largely determined by the effectiveness
with which information technology is used.
 Information technology is embedded in many products and
services.
 Reengineering efforts to attain greater productivity:

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 Industrial Age - Division of Labor: Separation of work

process into component task, with different workers
specializing in each of the tasks.
 Information Age – Teamwork, Interconnection, and
Shared Information.

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